Imagine a massive accident at a nuclear power plant. The damage to human life, property, and the environment would be unimaginable. But what if the law says the companies responsible only have to pay a fixed, limited amount of money, no matter how bad the disaster gets?
This frightening scenario is currently at the center of a major legal battle in the Supreme Court of India. The Court is examining the newly introduced Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act (SHANTI), 2025.
A group of retired civil servants and scientists has filed a Public Interest Litigation (PIL) challenging the law. They argue that the Act unfairly protects nuclear companies by putting a strict cap on how much they have to pay if things go wrong. However, the Supreme Court has made a powerful observation: no statutory cap can stop a constitutional court from delivering justice.
The Core Dispute: Capping The Payouts
When a company runs a hazardous business, they carry a massive risk. If an accident happens, the compensation required can run into lakhs of crores, as seen in historical tragedies like Chernobyl and Fukushima. Such disasters can leave vast areas of land uninhabitable for decades.
According to the PIL filed in the Supreme Court, the SHANTI Act of 2025 places strict limits on who pays what during a nuclear incident. The petitioners highlighted the following financial caps under the new law:
- Overall Liability: Capped at the rupee equivalent of 300 million Special Drawing Rights (an international reserve asset).
- Operator Liability: Ranges from ₹100 crore for smaller nuclear installations to ₹3,000 crore for the largest plants.
- Government Liability: The Central Government’s residual liability is capped at ₹4,500 crore.
Advocate Prashant Bhushan, representing the petitioners, argued that these numbers are extremely low compared to the actual cost of a major nuclear accident.
The Supplier Loophole: Section 16
Beyond the financial caps, the petition raises a red flag about Section 16 of the SHANTI Act. This section removes an operator’s statutory right to seek recourse against the suppliers of nuclear equipment.
In simple words, if a company supplies faulty parts to a nuclear plant and those parts cause a meltdown, the supplier is completely exempt from liability. The petitioners argue that letting suppliers off the hook is dangerous. If suppliers know they cannot be sued for compensation, they might have an incentive to cut corners and compromise on safety standards.
What The Law Says: The Principle of Absolute Liability
In Indian environmental and corporate law, there is a very strict rule for dangerous industries. It is called Absolute Liability.
During the hearing, Advocate Prashant Bhushan reminded the Court of the landmark Constitution Bench judgment in MC Mehta v. Union of India. In that historic case, the Supreme Court established that any enterprise engaged in a hazardous or inherently dangerous industry has an absolute and unlimited liability for any accident arising from its operations.
Absolute liability means there are no excuses. If your dangerous factory causes harm, you must pay for all the damage. You cannot claim that the accident happened due to an act of God, a stranger’s mischief, or that you took all reasonable care.
The petitioners argue that the SHANTI Act violates this Supreme Court precedent. By putting a cap on the compensation and exempting suppliers entirely, the law goes against the rule that hazardous industries must face unlimited liability.
The Supreme Court’s Crucial Observation
While hearing the arguments, a three-judge Bench comprising Chief Justice of India (CJI) Surya Kant, Justice Joymalya Bagchi, and Justice V Mohana made a highly significant observation.
The Bench clarified that even if Parliament passes a law putting a cap on compensation, that cap does not tie the hands of the higher judiciary.
CJI Surya Kant noted, “Irrespective of provisions of the Act, nothing shall preclude a constitutional court to determine the amount of fair and just compensation.”
This means that if a disaster occurs, victims can still approach the High Courts or the Supreme Court. These constitutional courts have the ultimate power to look past the limits set by the SHANTI Act and order the responsible parties to pay a much higher, realistic amount to ensure fair justice.
However, the petitioners requested the Court to officially record this clarification in a formal order. They stressed that unless this is made absolutely clear, nuclear operators and suppliers might operate under the false comfort of the statutory caps, leading to relaxed safety measures.
Who Watches The Watchmen? The Conflict of Interest
The PIL does not just challenge the compensation caps; it also points out a major flaw in how nuclear energy is regulated in India.
To keep nuclear plants safe, India has a regulator called the Atomic Energy Regulatory Board (AERB). For the AERB to do its job properly, it must be completely independent from the people who run the power plants.
However, Section 17(4) of the SHANTI Act states that the chairperson and members of the AERB will be appointed by the Central Government based on the recommendations of a search-cum-selection committee. This committee is constituted by the Atomic Energy Commission.
The problem? The Atomic Energy Commission is the very body that operates India’s nuclear power plants.
The petitioners argued that this is a clear conflict of interest. The people running the plants should not be the ones choosing the regulators who inspect them. When CJI Kant asked if replacing this system with a committee of bureaucrats would be better at selecting highly sophisticated scientists, the petitioners responded that there are many outstanding, independent nuclear scientists outside the Commission who could handle the selection process.
Why This Matters For You
While the laws governing nuclear energy might seem highly technical, they directly impact public safety and environmental health.
The petitioners made it clear that they are not against private participation or the generation of power. However, they pointed out that India has massive, safer alternatives. According to government assessments, India’s solar power potential is 3,343 GW, while the peak power demand is only around 256 GW. Comparing the costs and risks, they argued that solar energy is a far safer and cheaper alternative to nuclear power.
Ultimately, this case is about corporate accountability. If a private company is allowed to generate massive profits from a dangerous industry, they must also bear the full financial responsibility if their operations harm citizens or the environment.
What Happens Next
The Supreme Court has officially sought responses from the Central Government and the Atomic Energy Regulatory Board (AERB) regarding the concerns raised in the PIL. The government will now have to defend the provisions of the SHANTI Act and explain why the liability caps and regulatory structures are justified.
Takeaway: Parliament can write laws to limit corporate liability, but the Supreme Court has reminded the nation that constitutional courts always retain the ultimate power to ensure victims receive fair and just compensation.
Story reported by Barandbench. This article is BareLaw’s independent explanation and analysis.
